To demonstrate basic laws of endogenous spillover of innovation，a kind of three-stage dynamic game theory
modle with two substitution rates is introduced to probing positioning-pricing & innovation input and analyzed by using a
game model. It is found that the equilibrium position of duopoly distributes between minimum and maximum differentiation
which are merely special cases in new model. Some types of increasing or decreasing functions exist between innovation
input of firms and their innovation efficiency or absorption ability as well as between position differentiation and parameters,
which shows the characteristic of endogenous spillover and low cost innovation of equilibrium differentiation.